Entercom, the second largest U.S. broadcast group, now owns a part of United States Traffic Network.
The announcement comes just a few months after Entercom announced during its Q4 earnings call that it had taken a $4 million write down of revenues in the quarter related to its contract with USTN and that the traffic data provider was in a world of financial hurt.
“USTN is having significant financial issues, and we are currently negotiating with them on a new beneficial arrangement. We are working on alternative paths to mitigate the losses if USTN fails,” Entercom CEO David Field said at the time.
Plenty has happened since. USTN went through a management-led buyout in March, spearheaded by its President Ivan Shulman. It’s separation from Australian-based parent Global Traffic Network included forgiveness of an inter-company loan totaling $47.5 million, according to a press release. GTN, with operations in Australia, Brazil, Canada and the UK, had owned USTN since 2016.
Involving media groups at an equity level is an unprecedented move in the industry, Shulman said in a press release announcing the agreement.
USTN previously contracted with Entercom to acquire a significant amount of on-air traffic report inventory. USTN then resold the inventory to advertisers. Exact terms of the new partnership were not released.
Radio World has learned that USTN typically provides a significant amount of Entercom’s yearly revenue. In all, USTN provided about 2% of Entercom’s net revenue in 2017, according to Entercom’s earnings data.
“We are pleased to announce our new partnership with USTN,” Entercom’s Field said. “Their new management team has moved quickly to fix their issues and establish a solid business model following the company’s separation from its former corporate parent. We look forward to participating in their future growth as they capitalize on the significant opportunities in this attractive market segment.”
USTN, which has about 250 employees, collects and disseminates traffic information used by more than 1,100 television and radio stations.
Entercom isn’t the only major radio broadcaster to own at least a share of a major traffic service. iHeartMedia owns Total Traffic & Weather Network, which filed for Chapter 11 reorganization along with its parent company in March of this year.